Ecommerce Fulfilment is the process of receiving, storing, picking, packing, and shipping products to customers. It is a critical part of any business both online and offline that require items to be sent to end customers and retailers to manage wholesale supply chains, the cost of fulfilment can vary depending on a number of factors.
Factors that Affect Ecommerce Fulfilment Costs
Not all 3PL / Fulfilment Warehouses operate in the same way. The following are some of the factors that affect ecommerce fulfilment costs:
The size and weight of your products. Larger and heavier products are more expensive to ship, so you will need to factor this into your fulfilment costs. Most domestic (UK) couriers and the Royal Mail will have specific restrictions per service but they may have a ‘large’ service to cater for specific bigger items.
The number of products you sell. If you sell a large number of products, you will likely be able to negotiate lower fulfilment rates with a third-party logistics (3PL) provider. This is not simply for storage purpose but picking costs will vary if you can prove sales numbers and numbers of items picked as this will have an effect on the labour allocation to process your orders.
The location of your customers. Shipping costs vary depending on the distance between your warehouse and your customers. Nationally and internationally all have base costs, fuel surcharges and possible duty/tax payments. This is not always true for domestic shipments as most Royal Mail and next day courier services will cover most of the UK for a fixed cost. But the outer reaches of the UK and international shipments will understandably need more logistics to carry your goods to their end location.
The type of fulfilment services you need. Do you need your products picked, packed, and shipped individually? Or do you need a more comprehensive fulfilment service that includes returns processing and customer service? Most fulfilment services have the ability to give you fixed picking costs as well as a rate card for all packaging materials used. Remember each order may need a different size outer shipping carton and utilising various shipping methods to give great service, but to manage your profitability.
Average Ecommerce Fulfilment Costs
The average cost of ecommerce fulfilment per order is between £0.40 and £3.00 to pick/pack and add packaging to an order. However, this can vary widely depending on the factors listed above. For example, if you sell large and heavy products, your fulfilment costs will be higher. Similarly, if you sell a large number of products, you will likely be able to negotiate lower fulfilment rates.
With three main cost centres within Ecommerce Fulfilment, Storage Pick/pack, Dispatch. You need to ensure when looking at all 3PL providers that all costs are exposed and understood so you are not caught out.
How to Calculate Your Ecommerce Fulfilment Costs
To calculate your ecommerce fulfilment costs, you will need to consider the following factors:
The cost of receiving your products. This includes the cost of unpacking, inspecting, and storing your products. Storage can be calculated in various ways. Make sure you understand how you are being charged and apply the calculations to your order forecast to make sure you are profitable. You will see phrases like ‘Per Pallet per week’, volumetric and pick bay charges. Each have their place, but make sure you are being charged fairly.
The cost of picking and packing your orders. This includes the cost of picking the correct products from your warehouse, packing them in the appropriate packaging, and labelling them for shipping. Most fulfilment warehouses will look at the numbers of items to pick to calculate their costs to you. You may have a low number of orders, but the orders might have a lot of items that need picking, barcode verifying and packing. Or vice versa, you may see a lot of orders with single picks per order. Each requires picking stations to manage these types of orders and dispatch them on time and within your budget.
The cost of shipping your orders. This includes the cost of shipping labels, postage, and any other shipping-related fees. You may have a tier of shipping charges i.e. spend a certain amount and receive next day shipping or an upsell to track the items your consumer has purchased. Ask for recommendations from us, couriers rates change regularly and it maybe worth looking at a courier you have never thought of to guarantee quality of delivery.
The cost of returns processing. This includes the cost of receiving returned products, inspecting them, and processing refunds or exchanges. This is a reverse picking process and can often require more labour to analyse and ensure the returned order is managed correctly giving you the information to make a judgement call on the next stage of the order.
Once you have considered all of these factors, you can estimate your total ecommerce fulfilment costs. This will help you to determine how much you need to charge for your products in order to cover your fulfilment costs and make a profit.
How to Reduce Your Ecommerce Fulfilment Costs
There are a number of ways to reduce your ecommerce fulfilment costs. Some of these include:
Opting for a 3PL provider that offers lower fulfilment rates. But be careful of headline figures. We all have to pay staff to manage processes and warehouses obviously have overheads to be secure, manage processes and look after your stock appropriately. There are a lot of cost centres and ways to present charges, make sure you understand how you will be charged.
Shipping your products in bulk. This can help you to save on shipping costs. Pallet networks can be some of the cheapest ways to ship your goods across the UK and beyond.
Optimising your packaging. Using lightweight and sustainable packaging can help you to reduce your shipping costs. Make sure that cutting costs is not exposing your valuable products to potential damage. The carrier will only insure specific types of packaging, make sure it ticks all the right boxes.
Reducing the number of returns. This can be done by offering clear and concise return policies, and by making it easy for customers to return their products.
By following these tips, you can reduce your ecommerce fulfilment costs and improve your bottom line.
The cost of ecommerce fulfilment can vary depending on a number of factors. However, by understanding the factors that affect your fulfilment costs, you can estimate your total costs and make sure that you are charging enough for your products to cover your costs and make a profit.
Talk to us about how best to approach your e-commerce fulfilment and how we can work together to manage your order workflow. Without your success, we have none.
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Testimonial: alya skin. - Cosmetics & Beauty
"We assigned CBF Fulfilment as our third party logistics company for UK orders 2 years ago.
They have been nothing short of amazing to work with, they are extremely quick to despatch orders and have a team that are always so willing to help when needed.
As an ecommerce business owner that has worked with multiple 3PL companies and can safely say that CBF Fulfilment has been the best we have ever worked with in all the years."
Testimonial: Climbingvan - Books and Publication
"We run Climbingvan, a resource for helping people with self-build van conversions. Last year we wrote our book, The Van Conversion Bible, which explains exactly how to convert a campervan.
As we live full-time in our own van and work remotely from the road, it's not possible for us to manage our own fulfilment. CBF help us to get our book into the hands of our customers all across the country, as well as fulfilling our wholesale orders to larger suppliers. We appreciate their flexibility and the bespoke service they are able to offer us. The world of ecommerce was new to us, and the team at CBF have been really helpful in making everything possible for us, and are always friendly and quick to respond."
Charlie & Dale
Testimonial: Lola + Blake - Clothing & Accessories
"I’ve been really pleased with the service I have received from CBF. Each business is unique, and mine certainly has a lot of personalisation options and additions that customers request. CBF worked to implement these and find solutions to ensure that my brand remained as personal as when I individually wrapped and sent each order myself from my dining room table! Recent reviews from customers have remained positive with special mentions to the quality of the luxury gift wrap and the nice touch of personal notes."
Lola + Blake
Testimonial: Bodyhero - Health and Fitness
"CBF have been great in facilitating all aspects of our direct to consumer and business to business order fulfilment as our chosen 3PL company.
The team are always really helpful and resolve any questions or issues in a timely fashion."
Testimonial: Hyde & Hare - Luxury Cowhide Accessories
"CBF has been brilliant from start to finish in managing our fulfilment and distribution. What stands out is their ability to take initiative when processing orders and their support has been fundamental to our growth."
Hyde & Hare
Testimonial: Dodo Pad - Books & Publication
"Moving to CBF has enabled us to improve our service to our own eCommerce customers – next day delivery and orders always despatched on time with full tracking – as well as navigate increasingly complex international shipping.
We are a small business with a peak at Christmas. CBF has given us the flexibility we needed, which was not possible when we were managing fulfilment in house."
Testimonial: Lateral Line / Artemi Rum - Spirits Alcohol
"CBF has enabled us to establish our E-commerce platform initially through sales through Amazon. The service was very easy to set up, streamlined and efficient. Whenever any queries arise, they are very quickly dealt with by the CBF staff. We are very pleased to be working with CBF."
Testimonial: iNKSHIP. - Posters & Prints
"CBF have handled my orders for almost five years now, which single-handedly allowed me to grow from a bedroom business to a scale I could never have handled myself. I’m really grateful to the hard-working warehouse team who always fulfil my orders to a very high standard, and never seem to miss a beat."
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Your brand and online presence will not grow if your fulfilment partner lets you down with poorly packed and mispicked items. We are all hunting for the 5-star review and together we actively work on providing the processes and tracking to keep you and your customers informed.
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